Govt kicks Telstra out of NBN tender

update The Federal Government has kicked Telstra out of the competition to build the National Broadband Network, citing a technicality of the bidding process.

Donald McGauchie
(Credit: Telstra)

"Telstra has been informed that the Commonwealth has excluded it from the National Broadband Network requests for proposals process," the telco said in a statement this morning.

Telstra had submitted what many considered to be a very brief non-conforming bid on 26 November when responses were due, although Communications Minister Stephen Conroy at the time said that the telco's response would be considered.

Telstra chairman Donald McGauchie said the government's reasoning was that Telstra's bid did not include a plan for how to involve small to medium enterprises in the building of the NBN, a claim McGauchie said was fiction, as Telstra provided its SME plan in early December.

"The Commonwealth could hardly have dreamed up a more trivial reason to exclude Telstra from the NBN," the chairman said.

The telco was notified last night of its exclusion, according to chief executive Sol Trujillo, speaking at a briefing called at short notice this morning.

"Clearly we are a bit surprised at taking this action on a triviality," he said. "We were very clear in our minds that we were fully compliant."

Telstra's group general counsel Will Irving said that pushing Telstra out of the process was clearly a choice for the government and not a move based on the conditions of the RFP.

Telstra CEO Sol Trujillo
(Credit: Telstra)

"The government has the power under the existing process, if it wanted to have Telstra in the process, to keep Telstra in the process," he said. "Even if you take their view of the way they say the RFP has been worded, they could still have chosen to have us there if they'd wanted to. For that reason we assume that they do not wish to have us there."

Irving said that Telstra was out of the expert panel process, but after that was completed it would be up to the government if it wanted to talk to Telstra about the NBN.

Trujillo seemed to believe there was still the chance Telstra would get a look-in. "The RFP process leads only to the minister getting a recommendation. It is open for the government to re-engage with Telstra if and when it wishes," he said. "The minister can talk to whoever he wants to talk to after the panel reports to the minister. He can decide to take to cabinet whatever proposal he chooses. The cabinet will then make a decision."

The company had not decided on whether to take legal action or not. "We reserve our rights on future action. It is too early to rule anything in or out and we remain hopeful that sense will prevail outside the RFP process at a later date," Trujillo said.

Even if the move spelled curtains for Telstra's NBN bid, the telco had other options, Trujillo said, pointing to the possibility of extending the company's HFC cable network and increasing speeds of its Next G mobile network. Besides, Trujillo said, the company would have plenty of time.

"Even after decisions and legislation, there is a lot of time left to run before anyone else starts building. In which case any real impact on Telstra, even assuming we don't respond, and of course we will respond competitively, is years away," he said.

Telstra would beat the other bidders to the punch, Trujillo said. "We know that we can move faster, we can move bigger." His last words were: "Nothing stops Telstra".